A Sri Lankan gas station attendant fills up the tank of a motorcycle at a station in Colombo yesterday. Sri Lanka hiked the price of diesel and gasoline in response to galloping world crude oil prices, the state-run Ceylon Petroleum Corp said.

PHOTO: AFP

Iran plans to hike domestic gas prices to encourage consumers to conserve and to help to free up supplies for export, officials said on Saturday.

“The decision is to be announced this summer or just after,” a senior government official said.

He was speaking at the third annual Ravand Institute conference, which brings together political and economic leaders and experts from Iran and abroad, and whose proceedings may only be reported under the cloak of anonymity.

Natural gas sells for only US$0.02 per cubic meter in Iran, compared with US$0.30 in neighboring countries, and the difference represents a subsidy of around US$40 billion a year, the official said.

The plan will be to raise the price to US$0.15 per cubic meter for industrial customers, the official said, but he did not provide a figure for individual customers.

Ironically, while Iran has the world’s second-largest reserves of natural gas, the country is a net importer because of a highly inefficient use of it in industry and profligate use on the part of private consumers.

An official from Iran’s gas sector said the country needed to economize to export, and that it is consuming too much.

But an executive from an Iranian gas company said it was ironic that with such high reserves, Iran “could not heat its houses” and forecast that “gas shortages are going to be with us for a long time.”

The senior government official said the “peak of consumption went above 500 million cubic meters a day last winter but our production did not reach that level.”

In January, Iran announced record production of only 460 million cubic meters a day.

The country has a 20-year plan aiming to hike production to 1.45 billion cubic meters a day, with 642 million earmarked for domestic consumption, 259 million for injection in oil production wells and 550 million for export.

But these projects need massive investment, hampered by a US economic boycott.

SRI LANKA

Sri Lanka raised fuel prices and Bangladesh said it planned a hike soon, the latest Asian nations to find they can no longer afford to shield consumers from soaring oil prices.

The two poor South Asian countries announced their steps to limit mounting losses at state-owned oil retailers yesterday, just a day after Indonesia raised fuel prices to cap ballooning fuel subsidies.

India, Asia’s third-largest economy and the world’s second most populous nation, is considering such a move.

Governments across Asia have tried to soften the impact of a global surge in food and energy prices on their populations by keeping domestic prices of fuel and food staples below international levels.

But with oil powering to fresh records almost every week, the last one above US$135 a barrel, several nations feel they can no longer fully subsidize consumers or cover soaring losses of state-controlled oil importers and retailers.

The chairman of Sri Lanka’s Ceylon Petroleum Corp said that this weekend’s fuel price increase would allow the company to only halve its losses from 175 million Sri Lanka rupees (US$1.62 million) a day.

“Even after the increase we are still in the negative ... what we have done is we basically brought it to levels that we can manage,” Ashantha de Mell said.